How Does a Settlement Agreement Impact me Getting a Job in the Future?

If you have recently negotiated a settlement agreement with your current employer, and you’re looking to take on new work, you may be wondering how this agreement impacts your ability to find a job in the future. 

Luckily, there should be clauses contained within the settlement agreement that can ensure a mutually beneficial contract. However, there are still some issues that may arise that you should be aware of when moving forward with your career. 

You will have had to take independent legal advice on the terms of the settlement agreement. If you have been issued with a settlement agreement, and not yet received the advice, please get in touch with us today, either by emailing sa@smithpartnership.co.uk, or calling us on 08000 32 32 02, and we will be happy to help. 

Can a settlement agreement restrict your ability to get work? 

In some circumstances, a settlement agreement may restrict you from working for someone else for a dictated period of time, such as going to work for a direct competitor, which could lead to the poaching of clients, or you going to a job that could damage your previous employer’s reputation or contracts should the contents of the agreement be disclosed. This is referred to as a restrictive covenant and may also be covered by the confidentiality clauses contained with the settlement agreement. 

If you specifically resign to go to work for a direct competitor or rival, you may be placed on ‘garden leave’ for a specific amount of time where you will be prevented from attending the workplace or contacting clients, but you will continue to receive your salary and benefits. If there is no garden leave clause within your contract of employment, your employer may try to build this into a settlement agreement instead to protect their business interests.  

You should ensure that you compare any covenants in your settlement agreement to your original contract of employment before you agree to any restrictions, and receive independent legal advice on the clauses themselves. 

Can a settlement agreement impact my reference? 

As part of your settlement agreement negotiations, there may be a clause that states your employee's willingness to provide you with a satisfactory reference, and usually this will also be annexed to the agreement so that the wording is agreed in advance. However, it is important to remember that this is not a legal requirement of settlement agreements and is something you should specifically ask for as part of your agreement during negotiations.  

Settlement agreement solicitors for individuals can ensure that important elements are negotiated and included in your settlement agreement to ensure you get the best possible outcome.  

Can you disclose a settlement agreement? 

Typically, settlement agreements include a confidentiality clause which requires both the employer and the employee to keep the terms of the agreement confidential. This typically covers details such as the amount paid out to the employee and also the fact that a settlement agreement has been signed. 

This is beneficial for both employer and employee, as it can protect both parties' reputations and privacy. 

If you interview for a new job after a settlement agreement and your new employer wants to know about your reason for leaving your previous job, you may wish to think carefully about your explanation and refer carefully to any terms of confidentiality that are set out in your specific settlement agreement. 

Should you sign a settlement agreement where terms of confidentially are clearly stated, and you disclose the agreement to a new employer, you may be at risk of breaching your settlement agreement. 

What happens if you breach a settlement agreement? 

Should you breach the settlement agreement, such as the confidentiality terms mentioned above, you may be liable to pay back the money that was paid to you by your employer, together with any legal fees that were incurred as part of the negation process.  

Your employer may also be able to take further legal action against you. 

Can you work for the same company after a settlement agreement has been entered into with them? 

Unless the settlement agreement has a specific clause which states that you can no longer work for the company, or any group company, then you would be able to return, subject to the company accepting your application.  

Settlement agreements are usually implemented upon employment termination, however, since settlement agreements are used to resolve workplace disputes without the need to go to employment tribunal, sometimes employment can continue after an agreement has been signed. 

The types of disputes you may experience during ongoing employment can include: 

• When you have been a victim of harassment in the workplace 

• Your employer has acted in a discriminatory way towards you, such as not allowing you the same opportunities as your colleagues 

• Disagreements surrounding how commission and bonuses should be calculated  

However, it is more common for individuals to leave their workplace and seek employment elsewhere when a settlement agreement is entered into, as usually the working relationship will have broken down. 

Seek further guidance from settlement agreement employment solicitors 

If you’re still seeking further advice and guidance regarding settlement agreements and future employment, you can get in touch with our dedicated team of settlement agreement employment solicitors either by emailing sa@smithpartnership.co.uk, or calling us on 08000 32 32 02.